Peter’s post this morning (written a few days ago) seems extra timely considering news out yesterday about the latest inquiry the government has set for the Productivity Commission. The inquiry is to look at how local authorities regulate to make land available for housing.
The Government has asked the Productivity Commission to investigate ways to improve the way local authorities regulate to make land available for housing.
In 2012 the Productivity Commission completed an inquiry into housing affordability. This new inquiry will build on the 2012 inquiry, focusing on improving the supply and development capacity of land for housing in New Zealand cities, especially in areas of high population growth.
The Commission has been asked to examine and compare the rules and processes of local government to identify leading practices in planning and taking decisions about making land available for housing, and providing for necessary infrastructure. It has also been asked to look at models adopted by cities overseas that might provide valuable lessons for New Zealand.
“Our inquiry into housing affordability identified constraints on the supply of land as a major driver of New Zealand’s housing affordability problems. This new inquiry will delve deeper into how councils take decisions about making land available, as well as decisions about increasing the capacity for housing in existing urban areas through rules around such things as subdivision and intensive development”, said Commission Chair, Murray Sherwin.
“Capacity for more housing is not the single answer for housing affordability, but it is an essential component of a policy response, especially where demand for housing is outstripping supply.
“It is important that local authorities’ planning and development systems are working well to deliver an adequate supply of housing, while balancing the competing social, environmental and economic consequences of development. This inquiry will seek to identify which authorities are effective in making available enough land to meet demand, and have good processes that could be adopted by other authorities.
“We expect that the range of approaches used internationally and in New Zealand will provide valuable lessons for local authorities making decisions about land for housing”.
The terms of reference are now available below and anyone interested in the topic can subscribe to receive regular updates.
The Commission will begin the inquiry with the publication of an “issues paper” that will outline its proposed approach to this inquiry, the context for the inquiry, and a preliminary list of key questions to be addressed. The issues paper will seek submissions from all interested parties and be accompanied by consultation to gather a wide range of views and experience. The Commission’s final report to the Government is due on 30 September 2015.
The press release reads a bit like they are only going to be focused on opening up greenfield land so I hope the actual inquiry takes a more holistic look and also includes issues like land use restrictions e.g. minimum parking, height and density limits.
While it’s not likely I also think there should be a wider scope to look at the total costs of land use planning rather than just the cost and use of land and infrastructure. This should include the cost of providing other local and central government infrastructure, for example the cost of providing and running schools, emergency services, community facilities and a range of other services that should all be being taken in to account when making decisions about how land is zoned. Also let’s not forget one of the biggest costs imposed as a result of our land use planning and that’s transport costs which tend to be considerably higher in NZ than many other countries due to the dominance of private vehicles which his seeing people spending increasing amounts of their incomes on fuel.
As mentioned the next step above is for the commission to create a issues paper, we’ll be looking very closely at that once it has been produced.
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Surely this sort of stuff has been done by others elsewhere. Does the enquiry do a literature review of social and economic theory before leaping off into anecdote and opinion
“anecdote and opinion” – AKA New Zealand journalism
““anecdote and opinion”” – Not only NZ journalism, I’m afraid, but also certain NZ Government Ministers, aka Smith, Brownlee, Joyce and of course Key
They are the “I know everything I need to know already.” brigade, because they work on this set of principles (kind of an update of the 3 Monkeys principle):
“I believe everything I’m told, that I agree with. I hear everything that agrees with my beliefs. I see whatever my beliefs tell me I should see. I say what I believe in. I work hard to achieve these goals.”
Not a lot of hope for this to turn up anything new.
Same old, same old, Nero fiddling while Rome burns, meanwhile not a one house has actually been built and completed from all the previous rounds of Inquiries into “the housing crisis”.
So why will this achieve anything different?
Any enquiry needs to look closely at Auckland City Council, specifically the personnel working for the council who have proved inhibitive to Auckland moving forward.
The council should have an incentive.
At least in Mainland china, officials are getting cash-back(illegally) for any new developments they approved. So surprisingly, it actually develops faster that way.
I am not saying NZ should be corrupted, but at least there must be an incentive for them to do so.
I’ll need a lot of convincing this study will be anything other than a sprawl lovefest without decent analysis or looking at rules which limit density. The reference to “land supply” rather than “housing supply” already has me suspicious.
Agree – needs to be about supply, whether than means greenfield or brownfield. However given the Nats have been trying to undermine the Auckland Plan since it’s publication you can’t be surprised it’s biased already.
The Inquiry will be calling for submissions. Since land bankers and other rent seekers will be making submissions, it would be worthwhile transportblog submit something collectively, as well as individuals. These submissions would be passed on to government through the lens of free market economists, but they will have difficulty justifying the behaviour of some right wing supporters such as land bankers. Fortunately the report has to address both land supply and infrastructure. Some points to make could be
1. Private developers rarely have the scale to redevelop large brownfield sites, because the risks and capital requirements are too high for any single developer. See the attached link about Green Square in Sydney, which is located around an underground railway station between the Sydney CBD and Sydney Airport : http://www.planning.org.au/documents/item/5025 . Despite an ideal location and lots of announcements, little development has taken place in the last 10 years. The private sector development industry itself sees a role for the public sector, perhaps through various forms of public-private partnerships. Could local government should be charged with facilitating these, which would enable much more rapid development of brownfield sites ?.
2. The requirement of the Reserve Bank of New Zealand for higher equity in loans for apartments than for detached houses results in a much smaller apartment construction industry than in equivalent Australian cities, where banks are free to determine equity requirements themselves. What is the rationale for this market intervention ? For example, are there much higher default rates or lower rates of capital gain for apartments than stand-alone houses in similar geographical locations ?
3. In the southern US cities with rapid fringe development, the development costs are incorporated into a special rate levy. So the purchase price is low, but the infrastructure costs are covered by a public sector loan that may be the equivalent of tens of thousands of dollars on top of the purchase price of each house. Fringe development usually occurs in separate local government areas to more mature parts of the city, which limits potential cross-subsidisation of fringe development. An equivalent for New Zealand would be special development loans and rate levies to cover specific items of infrastructure for both brownfield and greenfield developments. Would the government allow special purpose borrowing by councils for such projects ?
This government has a track record of apparently seeking advice on policy matters from the Productivity Commission and kindred bodies when in reality what they are seeking is justification for a course they are already committed to. The terms of reference largely prejudge the outcome. From the language it appears that this body is expected (directed?) to recommend further loosening of development controls that restrict unsustainable sprawl. Note the reference to “the demands of purchasers” – just because there is a desire by some to be given the freedom to sprawl does not of course mean that it is in the wider public interest but this is precisely what I expect this “inquiry” to deliver and the government to use as justification for subsequent “reform” of legislation. Expect more Pegasus Bay type developments to follow.